Claims-Made Vs Occurrence Insurance For Contractors

Updated: July 30, 2025

Claims-Made Vs. Occurrence-Based Insurance: What Contractors And Professionals Need To Know

When choosing the right liability insurance for your business, one of the most critical decisions is selecting between a claims-made policy and an occurrence-based policy. The difference might seem subtle at first—but it can significantly affect your coverage, especially if a claim arises years after completing a job.

At All Pro Coverage, we help contractors, architects, engineers, home inspectors, and other professionals navigate this decision so they’re fully protected—without costly surprises.

What Is An Occurrence-Based Policy?

An occurrence-based insurance policy covers incidents that happen during the policy period, regardless of when the claim is reported. As long as the event occurred while the policy was active, you’re covered—even if the claim surfaces years later.

Example:
If your policy was active from 2022 to 2023, and a client files a lawsuit in 2025 over something that happened in 2022, your occurrence-based policy would respond to the claim.

This type of coverage is common in general liability insurance and is ideal for professionals who want long-term protection without worrying about future reporting deadlines.

What Is A Claims-Made Policy?

A claims-made policy provides coverage only if two conditions are met:

The claim is made while the policy is active (or within the tail period).
The event occurred on or after the retroactive date listed on the policy.

Example:
If your policy began in 2021 with a retroactive date of January 1, 2020, and a claim is filed in 2024 for something that happened in 2019, it won’t be covered. The incident predates the retroactive date.

Claims-made policies are the standard for professional liability insurance, including errors and omissions (E&O) for home inspectors, engineers, architects, and consultants.

Why Policy Type Matters

The key difference comes down to when the policy responds:

Occurrence-based: Covers any event that happened during the policy period—no matter when the claim is filed.
Claims-made: Only responds if the claim is made during the policy term and the event occurred after the retroactive date.

This difference affects long-term protection, pricing, and how you manage your insurance over time.

Learn more from this NAIC guide on types of insurance policies

Key Factors To Consider

✅ Cost

Claims-made policies usually start with lower premiums but may increase over time.
Occurrence-based policies tend to have higher initial premiums but provide broader coverage.

✅ Industry Standards

Some professions only offer one option. For example, E&O insurance is typically available only on a claims-made basis.

✅ Risk of Coverage Gaps

Switching policy types without proper tail coverage or knowing your retroactive date can lead to coverage gaps—leaving you exposed.

✅ Project Lifespan

If your work has long-term consequences (e.g., engineering, inspections, or construction), occurrence coverage (where available) may provide peace of mind. Otherwise, ensure your claims-made policy includes the right retroactive protections.

How All Pro Coverage Can Help

We understand the complexity of professional liability coverage. Our agents walk you through the pros and cons of each policy type, helping you avoid pitfalls and make informed decisions.

We specialize in coverage for:

We’ll evaluate your business model, contracts, and exposure timeline to recommend the best solution—whether you’re just starting out or managing multi-million-dollar projects.

Frequently Asked Questions

What is the difference between a claims-made and an occurrence-based insurance policy?
A claims-made policy only covers claims filed while the policy is active and after the retroactive date. An occurrence policy covers incidents that happened during the policy term, no matter when the claim is filed.

Is a claims-made policy cheaper than an occurrence policy?
Claims-made policies usually start with lower premiums but may become more expensive over time. Occurrence policies are more expensive upfront but offer broader lifetime coverage.

What happens if I cancel a claims-made policy?
You may lose coverage for prior work unless you purchase tail coverage. Claims must be reported while the policy is active or within the tail period.

Which policy type is better for home inspectors and engineers?
Claims-made policies are standard for professional liability insurance like E&O for home inspectors, engineers, and architects.

Can I switch from a claims-made to an occurrence policy?
You can, but you must carefully manage the transition to avoid coverage gaps—especially by knowing your retroactive date or securing tail coverage.

Final Thoughts: Make The Right Coverage Choice

Choosing the right insurance policy type isn’t just about price—it’s about long-term protection and smart risk management. An occurrence policy gives you lifetime protection for past work. A claims-made policy can be more flexible, but requires careful tracking of dates and tail coverage.

Don’t make assumptions when it comes to your protection. Let us help you choose wisely.

👉 Get a personalized quote now at AllProCoverage.com
Or call us at 888-858-1777 to speak directly with a licensed agent who understands your industry.